Controversy follows the former CEO of WWE Vince McMahon once again. It’s been a couple of months since the various scandals broke regarding his conduct with the illegal payments.
The Wall Street Journal reported on June 15th that the WWE Board of Directors was looking into $3 million worth of payments that McMahon paid to a former WWE employee he allegedly had an affair. The second report revealed that McMahon paid $12 million to former WWE employees for sexual misconduct allegations.
Now WWE has found more money linked to Vince McMahon. In an 8-K filing, WWE disclosed that it had discovered $14.6 million in ‘Unrecorded Expenses’ that were paid or will be paid by Mr. McMahon personally.
Now on August 9th, WWE submitted to the SEC, stating that it had found an additional $5 million dollars. Along with the aforementioned expenses, which were broken up into two payments. The filing noted that these expenses are not linked to the allegations against McMahon that led to the investigation by the Special Committee.
As a result, WWE stated that it will not be able to submit its quarterly filing on time “the Company is unable to file, without unreasonable effort and expense, its Form 10-Q for the quarterly period ended June 30, 2022.” Now, In total, there is $19.6 million in “Unrecorded Expenses” linked to McMahon.
The notice filed with the SEC went into much more detail about the latest money issue with Vince McMahon.
On June 17, 2022, World Wrestling Entertainment, Inc. (the “Company”) and its Board of Directors announced that a special committee of independent members of the Board of Directors (the “Special Committee”) was conducting an investigation into alleged misconduct by the Company’s former Chairman and Chief Executive Officer, Vincent K. McMahon, who resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest, and another executive, who is also no longer with the Company.
On July 25, 2022, the Company announced that it has made a preliminary determination that certain payments that Vince McMahon agreed to make during the period from 2006 through 2022 (including amounts paid and payable in the future totaling $14.6 million) were not appropriately recorded as expenses in the Company’s consolidated financial statements.
Since that time, the Company has determined that two additional payments totaling $5.0 million, unrelated to the allegations that led to the Special Committee investigation, that Mr. McMahon made in 2007 and 2009 should have been recorded in the Company’s consolidated financial statements. Together, these unrecorded expenses total $19.6 million (the “Unrecorded Expenses”). The Company has evaluated the Unrecorded Expenses and has determined that such amounts should have been recorded as expenses in each of the periods in which they became probable and estimable. All payments underlying the Unrecorded Expenses were or will be paid by Mr. McMahon personally. The Special Committee investigation remains ongoing.
Although the Company continues to evaluate the impact of the Unrecorded Expenses on previously issued financial statements, the Company has preliminarily determined that the amount of Unrecorded Expenses was not material in any individual period in which the Unrecorded Expenses arose, but that the aggregate amount of Unrecorded Expenses would be material if recorded entirely in the second quarter of 2022.
Accordingly, the Company currently anticipates that it will revise itspreviously issued financial statements to record the Unrecorded Expenses in the applicable periods for the years ended December 31, 2019, 2020 and 2021, as well as the first quarter of 2022, when it issues its financial statements for the second quarter of 2022.
In light of the Unrecorded Expenses and related facts thereto, the Company also expects to conclude that its disclosure controls and procedures and internal control over financial reporting were not effective as a result of one or more material weaknesses. The Company continues to evaluate the appropriate accounting treatment for the Unrecorded Expenses, as well as its disclosure controls and procedures and internal control over financial reporting, and its ultimate conclusions on these topics may differ from what the Company currently anticipates.
The Company has also received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters.
As a result of the circumstances described above, the Company is unable to file, without unreasonable effort and expense, its Form 10-Q for the quarterly period ended June 30, 2022 (the “Report”). The Company currently anticipates that it will file the Report within the five-day extension period provided under Rule 12b-25 of the Securities Exchange Act of 1934, as amended, but there can be no assurance that it will be able to do so. The Company provided preliminary estimates of certain financial results that it expects to report for the quarter ended June 30, 2022 in a Current Report on Form 8-K filed on July 25, 2022 (SEC File No. 001-16131).
Ringside News will continue to monitor the ongoing money scandal between Vince McMahon and the shareholders. It may get even worse before it gets better. In the meantime, WWE will continue on with Stephanie McMahon and Nick Khan as co-CEOs with Triple H leading the charge on creative.
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